The Enforcement Directorate (ED) is set to send judicial requests to authorities in Hong Kong and United Arab Emirates to seek details on owners or controllers of bank accounts and shell firms located there. These are under the scanner over allegations of irregular forex remittances worth Rs 6,000 crore abroad from 59 Bank of Baroda (BoB) accounts.
The agency may expand its probe and examine more such illegal transactions whose modus operandi are in vogue for the past 10 years to escape detection. The ED had initiated a Prevention of Money Laundering Act probe into the forex transactions that occurred during August 2014 to July this year and arrested four accused including a forex officer of a private bank and three traders.
“A majority of the 59 firms that held the concerned accounts at BoB’s branch had routed their money to Hong Kong, while some were to Dubai as well. We will seek cooperation from the authorities in Hong Kong and Dubai to get authenticated transaction-related details and other aspects of the money-trail including the identities of the recipient firms and owners controlling the accounts there,” said an ED source.
The case was “not of black money stashed abroad but of trade-based money laundering where exporters and importers gain duty drawback (incentive/refund) and save customs duty by over-invoicing and under-invoicing, respectively,” according to the source.
“Such exporters and importers need to send the amount to a foreign country via certain means. Some of them used the hawala route, but for the past 10 years a lot of them have been using banking channels for the purpose,” he said.
The probe reportedly revealed that each transaction routed to a few recipients in Hong Kong and Dubai was deliberately kept below $100,000 to avoid detection by the Financial Intelligence Unit (FIU) and the Reserve Bank of India.
The cost to an exporter for remitting $1 abroad was around Rs 1.20, “a process that involved changing money from black to white and vice-versa.”
“One of the traders received `15 crore under drawback duty, an export-oriented incentive scheme, within seven months.”
The CBI, which is conducting its separate probe in the case and arrested two senior BoB officials on Tuesday, said it has intensified its search for owners of the 59 accounts under its scanner as a significant number of them are currently untraceable.